PVH Stock May Be Turning Around
MarketBeat.com | Apr 01, 2022 03:12AM ET
Fashion brand PVH Corp (NYSE:PVH) stock is attempting to stage a comeback after the benchmark index sell-off. The maker of iconic brands including Calvin Klein and Tommy Hilfiger saw double-digit top-line growth and raised guidance despite supply chain headwinds. PVH also faced significant logistics disruptions including U.S. port delays that made a (-4%) impact causing the Company to shift the timing of wholesale shipments into the fourth quarter.
Despite these issues, the Company saw strong pricing power driving digital e-commerce penetration to 25% of total sales and double digit top-line growth. The Company is focused on expanding its penetration into the next generation consumer which includes the Gen-Z and millennial demographic who tend to favor digital channels. Prudent investors seeking exposure in turnaround play leveraging proven iconic fashion brands can watch for opportunistic pullback levels in shares of PVH Corp.
h2 Q3 Fiscal 2021 Earnings Release /h2On Feb 2, 2021, PVH released its third-quarter fiscal 2021 results for the quarter ending October 2021. The Company reported earnings-per-share (EPS) of $2.67 excluding non-recurring items beating consensus analyst estimates by $0.61. Revenues grew 10% year-over-year (YoY) to $2.33 billion. U.S. port delays caused the Company to shift wholesale shipments to the fourth quarter from the third quarter causing a (-4%) impact. International sales significantly exceeded third quarter 2019 levels. Digital channel revenues rose 15%. Digital penetration as percentage of total revenues was 21%. Gross margin improved 300 bps compared to pre-pandemic 2019 levels. The Company raised its full-year 2021 EPS outlook to $9.25, up from $8.50 prior guidance. PVH CEO Stefan Larsson commented:
h2 Conference Call Takeaways/h2
“Looking ahead, while we continue to monitor the evolving COVID uncertainty, based on our strong third quarter performance and current momentum with holiday sales off to a strong start, we are further raising our earnings guidance for the full year. We are now forecasting operating margins above 2019 pre-pandemic levels. We remain highly focused on driving sustainable, long-term profitable growth and shareholder value.”
CEO Larsson noted the strong pricing power across its Calvin Klein and Tommy Hilfiger brands with increased pricing power and “supercharged” ecommerce driving its digital penetration to 25% of total business in 2021. This drove in higher gross margins by 300 bps. Its international business was strong across all brands. Europe saw double digit sales growth compared to 2019 pre-pandemic levels in its Calvin and Tommy brands thanks to strong full price sell through and higher operating margins. Digital sales made up 23% of total revenues. Its brick and mortar business also saw significant outperformance than planned. North America faced pressure from lack of tourism and worsening port delays in October. PVH continues to accelerate recoveries with increased focus on younger consumers in the Gen-Z and millennial demographics through product strength, pricing power and supercharged e-commerce. North America remains the priority to unlock multi-year opportunities. He noted:
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Read market moving news with a personalized feed of stocks you care about.Get The App“In closing, as I have shared previously, when the pandemic hit, we first set out to successfully navigate through the initial face of the COVID crisis, which we did, and to do that in a way that sets us up to drive an accelerated recovery which we are now driving, all while positioning us to win in the new normal coming out of it.”
He noted the investor day in April will be its first in over a decade.
Using buy triggered on the breakout above $77.50. Prudent investors can watch for opportunistic pullback levels sit at the $78.76 fib, $76.58 fib, $72.43, $68.94 fib, $66.28 fib, $63.70 fib, $59.05 fib, and the $56.28 fib level. Upside trajectories range from the $96.95 fib level up towards the $115.08 fib level.
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